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4,700 | Payoff Information and Learning in Signaling Games | econ.TH | We add the assumption that players know their opponents' payoff functions and
rationality to a model of non-equilibrium learning in signaling games. Agents
are born into player roles and play against random opponents every period.
Inexperienced agents are uncertain about the prevailing distribution of
opponents' play, ... | economics |
4,701 | Player-Compatible Learning and Player-Compatible Equilibrium | econ.TH | Player-Compatible Equilibrium (PCE) imposes cross-player restrictions on the
magnitudes of the players' "trembles" onto different strategies. These
restrictions capture the idea that trembles correspond to deliberate
experiments by agents who are unsure of the prevailing distribution of play.
PCE selects intuitive equi... | economics |
4,702 | Investigating Wheat Price with a Multi-Agent Model | econ.TH | In this paper, we build a computational model for the analysis of
international wheat spot price formation, its dynamics and the dynamics of
internationally exchanged quantities. The model has been calibrated using
FAOSTAT data to evaluate its in-sample predictive power. The model is able to
generate wheat prices in tw... | economics |
4,703 | Exceeding Expectations: Stochastic Dominance as a General Decision Theory | econ.TH | The principle that rational agents should maximize expected utility or
choiceworthiness is intuitively plausible in many ordinary cases of
decision-making under uncertainty. But it is less plausible in cases of
extreme, low-probability risk (like Pascal's Mugging), and intolerably
paradoxical in cases like the St. Pete... | economics |
4,704 | Banking Stability System: Does it Matter if the Rate of Return is Fixed or Stochastic? | econ.TH | The purpose is to compare the perfect Stochastic Return (SR) model like
Islamic banks to the Fixed Return (FR) model as in conventional banks by
measuring up their impacts at the macroeconomic level. We prove that if the
optimal choice of investor share in SR model {\alpha}* realizes the
indifference of the financial i... | economics |
4,705 | Preference Identification | econ.TH | An experimenter seeks to learn a subject's preference relation. The
experimenter produces pairs of alternatives. For each pair, the subject is
asked to choose. We argue that, in general, large but finite data do not give
close approximations of the subject's preference, even when the limiting
(countably infinite) data ... | economics |
4,706 | Strictly strategy-proof auctions | econ.TH | A strictly strategy-proof mechanism is one that asks agents to use strictly
dominant strategies. In the canonical one-dimensional mechanism design setting
with private values, we show that strict strategy-proofness is equivalent to
strict monotonicity plus the envelope formula, echoing a well-known
characterisation of ... | economics |
4,707 | Dynamic Random Subjective Expected Utility | econ.TH | Dynamic Random Subjective Expected Utility (DR-SEU) allows to model choice
data observed from an agent or a population of agents whose beliefs about
objective payoff-relevant states and tastes can both evolve stochastically. Our
observable, the augmented Stochastic Choice Function (aSCF) allows, in contrast
to previous... | economics |
4,708 | A characterization of "Phelpsian" statistical discrimination | econ.TH | We establish that statistical discrimination is possible if and only if it is
impossible to uniquely identify the signal structure observed by an employer
from a realized empirical distribution of skills. The impossibility of
statistical discrimination is shown to be equivalent to the existence of a
fair, skill-depende... | economics |
4,709 | Existence of Equilibrium Prices: A Pedagogical Proof | econ.TH | Under the same assumptions made by Mas-Colell et al. (1995), I develop a
short, simple, and complete proof of existence of equilibrium prices based on
excess demand functions. The result is obtained by applying the Brouwer fixed
point theorem to a trimmed simplex which does not contain prices equal to zero.
The mathema... | economics |
4,710 | Mechanism Design with News Utility | econ.TH | News utility is the idea that the utility of an agent depends on changes in
her beliefs over consumption and money. We introduce news utility into
otherwise classical static Bayesian mechanism design models. We show that a key
role is played by the timeline of the mechanism, i.e. whether there are delays
between the an... | economics |
4,711 | $k$th price auctions and Catalan numbers | econ.TH | This paper establishes an interesting link between $k$th price auctions and
Catalan numbers by showing that for distributions that have linear density, the
bid function at any symmetric, increasing equilibrium of a $k$th price auction
with $k\geq 3$ can be represented as a finite series of $k-2$ terms whose
$\ell$th te... | economics |
4,712 | The Structure of Equilibria in Trading Networks with Frictions | econ.TH | Several structural results for the set of competitive equilibria in trading
networks with frictions are established: The lattice theorem, the rural
hospitals theorem, the existence of side-optimal equilibria, and a
group-incentive-compatibility result hold with imperfectly transferable utility
and in the presence of fr... | economics |
4,713 | Repeated Coordination with Private Learning | econ.TH | We study a repeated game with payoff externalities and observable actions
where two players receive information over time about an underlying
payoff-relevant state, and strategically coordinate their actions. Players
learn about the true state from private signals, as well as the actions of
others. They commonly learn ... | economics |
4,714 | The Indirect Cost of Information | econ.TH | We study the indirect cost of information from sequential information cost
minimization. A key sub-additivity condition, together with monotonicity
equivalently characterizes the class of indirect cost functions generated from
any direct information cost. Adding an extra (uniform) posterior separability
condition equiv... | economics |
4,715 | The Core of an Economy with an Endogenous Social Division of Labour | econ.TH | This paper considers the core of a competitive market economy with an
endogenous social division of labour. The theory is founded on the notion of a
"consumer-producer", who consumes as well as produces commodities. First, we
show that the Core of such an economy with an endogenous social division of
labour can be foun... | economics |
4,716 | A note on contests with a constrained choice set of effort | econ.TH | We consider a symmetric two-player contest, in which the choice set of effort
is constrained. We apply a fundamental property of the payoff function to show
that, under standard assumptions, there exists a unique Nash equilibrium in
pure strategies. It is shown that all equilibria are near the unconstrained
equilibrium... | economics |
4,717 | Time preference and information acquisition | econ.TH | I consider the sequential implementation of a target information structure. I
characterize the set of decision time distributions induced by all signal
processes that satisfy a per-period learning capacity constraint. I find that
all decision time distributions have the same expectation, and the maximal and
minimal ele... | economics |
4,718 | Sorting and filtering as effective rational choice procedures | econ.TH | Many online shops offer functionality that help their customers navigate the
available alternatives. For instance, options to filter and to sort goods are
wide-spread. In this paper we show that sorting and filtering can be used by
rational consumers to find their most preferred choice -- quickly. We
characterize the p... | economics |
4,719 | Selling Information | econ.TH | I consider the monopolistic pricing of informational good. A buyer's
willingness to pay for information is from inferring the unknown payoffs of
actions in decision making. A monopolistic seller and the buyer each observes a
private signal about the payoffs. The seller's signal is binary and she can
commit to sell any ... | economics |
4,720 | Matching in Dynamic Imbalanced Markets | econ.TH | We study dynamic matching in exchange markets with easy- and hard-to-match
agents. A greedy policy, which attempts to match agents upon arrival, ignores
the positive externality that waiting agents generate by facilitating future
matchings. We prove that this trade-off between a ``thicker'' market and faster
matching v... | economics |
4,721 | Completeness and Transitivity of Preferences on Mixture Sets | econ.TH | In this paper, we show that the presence of the Archimedean and the
mixture-continuity properties of a binary relation, both empirically
non-falsifiable in principle, foreclose the possibility of consistency
(transitivity) without decisiveness (completeness), or decisiveness without
consistency, or in the presence of a... | economics |
4,722 | The Model Selection Curse | econ.TH | A "statistician" takes an action on behalf of an agent, based on the agent's
self-reported personal data and a sample involving other people. The action
that he takes is an estimated function of the agent's report. The estimation
procedure involves model selection. We ask the following question: Is
truth-telling optima... | economics |
4,723 | Optimal policy design for the sugar tax | econ.TH | Healthy nutrition promotions and regulations have long been regarded as a
tool for increasing social welfare. One of the avenues taken in the past decade
is sugar consumption regulation by introducing a sugar tax. Such a tax
increases the price of extensive sugar containment in products such as soft
drinks. In this art... | economics |
4,724 | The Losses from Integration in Matching Markets can be Large | econ.TH | Although the integration of two-sided matching markets using stable
mechanisms generates expected gains from integration, I show that there are
worst-case scenarios in which these are negative. The losses from integration
can be large enough that the average rank of an agent's spouse decreases by
37.5% of the length of... | economics |
4,725 | Revealed Stochastic Preference: A One-Paragraph Proof and Generalization | econ.TH | McFadden and Richter (1991) and later McFadden (2005) show that the Axiom of
Revealed Stochastic Preference characterizes rationalizability of choice
probabilities through random utility models on finite universal choice spaces.
This note proves the result in one short, elementary paragraph and extends it
to set valued... | economics |
4,726 | Corrigendum to "Managerial Incentive Problems: A Dynamic Perspective" | econ.TH | This paper corrects some mathematical errors in Holmstr\"om (1999) and
clarifies the assumptions that are sufficient for the results of Holmstr\"om
(1999). The results remain qualitatively the same. | economics |
4,727 | Uncertainty and Robustness of Surplus Extraction | econ.TH | This paper studies a robust version of the classic surplus extraction
problem, in which the designer knows only that the beliefs of each type belong
to some set, and designs mechanisms that are suitable for all possible beliefs
in that set. We derive necessary and sufficient conditions for full extraction
in this setti... | economics |
4,728 | Characterizing Permissibility, Proper Rationalizability, and Iterated Admissibility by Incomplete Information | econ.TH | We characterize three interrelated concepts in epistemic game theory:
permissibility, proper rationalizability, and iterated admissibility. We define
the lexicographic epistemic model for a game with incomplete information. Based
on it, we give two groups of characterizations. The first group characterizes
permissibili... | economics |
4,729 | Mechanism Design with Limited Commitment | econ.TH | We develop a tool akin to the revelation principle for dynamic
mechanism-selection games in which the designer can only commit to short-term
mechanisms. We identify a canonical class of mechanisms rich enough to
replicate the outcomes of any equilibrium in a mechanism-selection game between
an uninformed designer and a... | economics |
4,730 | Constrained Information Design | econ.TH | We provide tools to analyze information design problems subject to
constraints. We do so by showing that the techniques in Le Treust and Tomala
(2019) extend to the case of multiple inequality and equality constraints. This
showcases the power of the results in that paper to analyze problems of
information design subje... | economics |
4,731 | A Model of Competing Narratives | econ.TH | We formalize the argument that political disagreements can be traced to a
"clash of narratives". Drawing on the "Bayesian Networks" literature, we model
a narrative as a causal model that maps actions into consequences, weaving a
selection of other random variables into the story. An equilibrium is defined
as a probabi... | economics |
4,732 | Measuring Knowledge for Recognition and Knowledge Entropy | econ.TH | People employ their knowledge to recognize things. This paper is concerned
with how to measure people's knowledge for recognition and how it changes. The
discussion is based on three assumptions. Firstly, we construct two evolution
process equations, of which one is for uncertainty and knowledge, and the other
for unce... | economics |
4,733 | Fair and Efficient Division among Families | econ.TH | Is efficiency consistent with fairness? Our approach to this question
concerns the case where multiple individuals with diverse preferences are bound
to consume the same bundle. Families are our lead example: the father, mother
and children get to consume the same garden, kitchen, and vacations. We adapt
each of the th... | economics |
4,734 | Why are prices proportional to embodied energies? | econ.TH | The observed proportionality between nominal prices and average embodied
energies cannot be interpreted with conventional economic theory. A model is
presented that places energy transfers as the focal point of scarcity based on
the idea that (1) goods are material rearrangements, and (2) humans can only
rearrange matt... | economics |
4,735 | Fair Odds for Noisy Probabilities | econ.TH | We suggest that one individual holds multiple degrees of belief about an
outcome, given the evidence. We then investigate the implications of such noisy
probabilities for a buyer and a seller of binary options and find the odds
agreed upon to ensure zero-expectation betting, differ from those consistent
with the relati... | economics |
4,736 | Strategically Simple Mechanisms | econ.TH | We define and investigate a property of mechanisms that we call "strategic
simplicity," and that is meant to capture the idea that, in strategically
simple mechanisms, strategic choices require limited strategic sophistication.
We define a mechanism to be strategically simple if choices can be based on
first-order beli... | economics |
4,737 | The Income Fluctuation Problem with Capital Income Risk: Optimality and Stability | econ.TH | This paper studies the income fluctuation problem with capital income risk
(i.e., dispersion in the rate of return to wealth). Wealth returns and labor
earnings are allowed to be serially correlated and mutually dependent. Rewards
can be bounded or unbounded. Under rather general conditions, we develop a set
of new res... | economics |
4,738 | Mutual Conversion Between Preference Maps And Cook-Seiford Vectors | econ.TH | In group decision making, the preference map and Cook-Seiford vector are two
concepts as ways of describing ties-permitted ordinal rankings. This paper
shows that they are equivalent for representing ties-permitted ordinal
rankings. Transformation formulas from one to the other are given and the
inherent consistency of... | economics |
4,739 | The cost of information | econ.TH | We develop an axiomatic theory of information acquisition that captures the
idea of constant marginal costs in information production: the cost of
generating two independent signals is the sum of their costs, and generating a
signal with probability half costs half its original cost. Together with
Blackwell monotonicit... | economics |
4,740 | A theoretical framework to consider energy transfers within growth theory | econ.TH | Growth theory has rarely considered energy despite its invisible hand in all
physical systems. We develop a theoretical framework that places energy
transfers at centerstage of growth theory based on two principles: (1) goods
are material rearrangements and (2) such rearrangements are done by energy
transferred by prim... | economics |
4,741 | Causality: a decision theoretic approach | econ.TH | We propose a decision-theoretic model akin to Savage (1972) that is useful
for defining causal effects. Within this framework, we define what it means for
a decision maker (DM) to act as if the relation between the two variables is
causal. Next, we provide axioms on preferences and show that these axioms are
equivalent... | economics |
4,742 | Duesenberry's Theory of Consumption: Habit, Learning, and Ratcheting | econ.TH | This paper investigates the consumption and risk taking decision of an
economic agent with partial irreversibility of consumption decision by
formalizing the theory proposed by Duesenberry (1949). The optimal policies
exhibit a type of the (s, S) policy: there are two wealth thresholds within
which consumption stays co... | economics |
4,743 | Cartel Stability under Quality Differentiation | econ.TH | This note considers cartel stability when the cartelized products are
vertically differentiated. If market shares are maintained at pre-collusive
levels, then the firm with the lowest competitive price-cost margin has the
strongest incentive to deviate from the collusive agreement. The lowest-quality
supplier has the t... | economics |
4,744 | Equivalent Choice Functions and Stable Mechanisms | econ.TH | We study conditions for the existence of stable and group-strategy-proof
mechanisms in a many-to-one matching model with contracts if students'
preferences are monotone in contract terms. We show that "equivalence",
properly defined, to a choice profile under which contracts are substitutes and
the law of aggregate hol... | economics |
4,745 | Interdistrict School Choice: A Theory of Student Assignment | econ.TH | Interdistrict school choice programs-where a student can be assigned to a
school outside of her district-are widespread in the US, yet the market-design
literature has not considered such programs. We introduce a model of
interdistrict school choice and present two mechanisms that produce stable or
efficient assignment... | economics |
4,746 | Optimal Insurance with Limited Commitment in a Finite Horizon | econ.TH | We study a finite horizon optimal contracting problem of a risk-neutral
principal and a risk-averse agent who receives a stochastic income stream when
the agent is unable to make commitments. The problem involves an infinite
number of constraints at each time and each state of the world. Miao and Zhang
(2015) have deve... | economics |
4,747 | Credit Cycles, Securitization, and Credit Default Swaps | econ.TH | We present a limits-to-arbitrage model to study the impact of securitization,
leverage and credit risk protection on the cyclicity of bank credit. In a
stable bank credit situation, no cycles of credit expansion or contraction
appear. Unlevered securitization together with mis-pricing of securitized
assets increases le... | economics |
4,748 | Conditions for the uniqueness of the Gately point for cooperative games | econ.TH | We are studying the Gately point, an established solution concept for
cooperative games. We point out that there are superadditive games for which
the Gately point is not unique, i.e. in general the concept is rather
set-valued than an actual point. We derive conditions under which the Gately
point is guaranteed to be ... | economics |
4,749 | RPS(1) Preferences | econ.TH | We consider a model for decision making based on an adaptive, k-period,
learning process where the priors are selected according to Von
Neumann-Morgenstern expected utility principle. A preference relation between
two prospects is introduced, defined by the condition which prospect is
selected more often. We show that ... | economics |
4,750 | Relational Communication | econ.TH | We study a communication game between an informed sender and an uninformed
receiver with repeated interactions and voluntary transfers. Transfers motivate
the receiver's decision-making and signal the sender's information. Although
full separation can always be supported in equilibrium, partial or complete
pooling is o... | economics |
4,751 | A Noncooperative Model of Contest Network Formation | econ.TH | In this paper we study a model of weighted network formation. The bilateral
interaction is modeled as a Tullock contest game with the possibility of a
draw. We describe stable networks under different concepts of stability. We
show that a Nash stable network is either the empty network or the complete
network. The comp... | economics |
4,752 | Theories and Practice of Agent based Modeling: Some practical Implications for Economic Planners | econ.TH | Nowadays, we are surrounded by a large number of complex phenomena ranging
from rumor spreading, social norms formation to rise of new economic trends and
disruption of traditional businesses. To deal with such phenomena,Complex
Adaptive System (CAS) framework has been found very influential among social
scientists,esp... | economics |
4,753 | Modelling transfer profits as externalities in a cooperative game-theoretic model of natural gas networks | econ.TH | Existing cooperative game theoretic studies of bargaining power in gas
pipeline systems are based on the so called characteristic function form (CFF).
This approach is potentially misleading if some pipelines fall under regulated
third party access (TPA). TPA, which is by now the norm in the EU, obliges the
owner of a ... | economics |
4,754 | Bayesian Elicitation | econ.TH | How can a receiver design an information structure in order to elicit
information from a sender? We study how a decision-maker can acquire more
information from an agent by reducing her own ability to observe what the agent
transmits. Intuitively, when the two parties' preferences are not perfectly
aligned, this garbli... | economics |
4,755 | Persuasion Meets Delegation | econ.TH | A principal can restrict an agent's information (the persuasion problem) or
restrict an agent's discretion (the delegation problem). We show that these
problems are generally equivalent - solving one solves the other. We use tools
from the persuasion literature to generalize and extend many results in the
delegation li... | economics |
4,756 | The preference lattice | econ.TH | Most comparisons of preferences are instances of single-crossing dominance.
We examine the lattice structure of single-crossing dominance, proving
characterisation, existence and uniqueness results for minimum upper bounds of
arbitrary sets of preferences. We apply these theorems to derive comparative
statics for colle... | economics |
4,757 | Persuading part of an audience | econ.TH | I propose a cheap-talk model in which the sender can use private messages and
only cares about persuading a subset of her audience. For example, a candidate
only needs to persuade a majority of the electorate in order to win an
election. I find that senders can gain credibility by speaking truthfully to
some receivers ... | economics |
4,758 | Exact Solution for the Portfolio Diversification Problem Based on Maximizing the Risk Adjusted Return | econ.TH | The potential benefits of portfolio diversification have been known to
investors for a long time. Markowitz (1952) suggested the seminal approach for
optimizing the portfolio problem based on finding the weights as budget shares
that minimize the variance of the underlying portfolio. Hatemi-J and El-Khatib
(2015) sugge... | economics |
4,759 | Price competition with uncertain quality and cost | econ.TH | Consumers in many markets are uncertain about firms' qualities and costs, so
buy based on both the price and the quality inferred from it. Optimal pricing
depends on consumer heterogeneity only when firms with higher quality have
higher costs, regardless of whether costs and qualities are private or public.
If better q... | economics |
4,760 | J. S. Mill's Liberal Principle and Unanimity | econ.TH | The broad concept of an individual's welfare is actually a cluster of related
specific concepts that bear a "family resemblance" to one another. One might
care about how a policy will affect people both in terms of their subjective
preferences and also in terms of some notion of their objective interests. This
paper pr... | economics |
4,761 | Slow persuasion | econ.TH | What are the value and form of optimal persuasion when information can be
generated only slowly? We study this question in a dynamic model in which a
'sender' provides public information over time subject to a graduality
constraint, and a decision-maker takes an action in each period. Using a novel
'viscosity' dynamic ... | economics |
4,762 | On the core of normal form games with a continuum of players : a correction | econ.TH | We study the core of normal form games with a continuum of players and
without side payments. We consider the weak-core concept, which is an
approximation of the core, introduced by Weber, Shapley and Shubik. For payoffs
depending on the players' strategy profile, we prove that the weak-core is
nonempty. The existence ... | economics |
4,763 | An interim core for normal form games and exchange economies with incomplete information: a correction | econ.TH | We consider the interim core of normal form cooperative games and exchange
economies with incomplete information based on the partition model. We develop
a solution concept that we can situate roughly between Wilson's coarse core and
Yannelis's private core. We investigate the interim negotiation of contracts
and addre... | economics |
4,764 | Herding driven by the desire to differ | econ.TH | Observational learning often involves congestion: an agent gets lower payoff
from an action when more predecessors have taken that action. This preference
to act differently from previous agents may paradoxically increase all but one
agent's probability of matching the actions of the predecessors. The reason is
that wh... | economics |
4,765 | Optimal mechanism for the sale of a durable good | econ.TH | A buyer wishes to purchase a durable good from a seller who in each period
chooses a mechanism under limited commitment. The buyer's valuation is binary
and fully persistent. We show that posted prices implement all equilibrium
outcomes of an infinite-horizon, mechanism selection game. Despite being able
to choose mech... | economics |
4,766 | Limits to green growth and the dynamics of innovation | econ.TH | Central to the official "green growth" discourse is the conjecture that
absolute decoupling can be achieved with certain market instruments. This paper
evaluates this claim focusing on the role of technology, while changes in GDP
composition are treated elsewhere. Some fundamental difficulties for absolute
decoupling, ... | economics |
4,767 | Tax Mechanisms and Gradient Flows | econ.TH | We demonstrate how a static optimal income taxation problem can be analyzed
using dynamical methods. Specifically, we show that the taxation problem is
intimately connected to the heat equation. Our first result is a new property
of the optimal tax which we call the fairness principle. The optimal tax at any
income is ... | economics |
4,768 | Compactification of Extensive Game Structures and Backward Dominance Procedure | econ.TH | We study the relationship between invariant transformations on extensive game
structures and backward dominance procedure (BD), a generalization of the
classical backward induction introduced in Perea (2014). We show that
behavioral equivalence with unambiguous orderings of information sets, a
critical property that gu... | economics |
4,769 | Netflix Games: Local Public Goods with Capacity Constraints | econ.TH | This paper considers incentives to provide goods that are partially
excludable along social links. Individuals face a capacity constraint in that,
conditional upon providing, they may nominate only a subset of neighbours as
co-beneficiaries. Our model has two typically incompatible ingredients: (i) a
graphical game (in... | economics |
4,770 | When abstinence increases prevalence | econ.TH | In the pool of people seeking partners, a uniformly greater preference for
abstinence increases the prevalence of infection and worsens everyone's
welfare. In contrast, prevention and treatment reduce prevalence and improve
payoffs. The results are driven by adverse selection: people who prefer more
partners are likeli... | economics |
4,771 | Spherical Preferences | econ.TH | We introduce and study the property of orthogonal independence, a restricted
additivity axiom applying when alternatives are orthogonal. The axiom requires
that the preference for one marginal change over another should be maintained
after each marginal change has been shifted in a direction that is orthogonal
to both.... | economics |
4,772 | The paradox of monotone structural QRE | econ.TH | McKelvey and Palfrey (1995)'s monotone structural Quantal Response
Equilibrium theory may be misspecified for the study of monotone behavior. | economics |
4,773 | Empirical bias of extreme-price auctions: analysis | econ.TH | We advance empirical equilibrium analysis (Velez and Brown, 2020,
arXiv:1907.12408) of the winner-bid and loser-bid auctions for the dissolution
of a partnership. We show, in a complete information environment, that even
though these auctions are essentially equivalent for the Nash equilibrium
prediction, they can be e... | economics |
4,774 | Credit Scoring by Incorporating Dynamic Networked Information | econ.TH | In this paper, the credit scoring problem is studied by incorporating
networked information, where the advantages of such incorporation are
investigated theoretically in two scenarios. Firstly, a Bayesian optimal filter
is proposed to provide risk prediction for lenders assuming that published
credit scores are estimat... | economics |
4,775 | On the many-to-one strongly stable fractional matching set | econ.TH | For a many-to-one matching market where firms have strict and
$\boldsymbol{q}$-responsive preferences, we give a characterization of the set
of strongly stable fractional matchings as the union of the convex hull of all
connected sets of stable matchings. Also, we prove that a strongly stable
fractional matching is rep... | economics |
4,776 | Detectability, Duality, and Surplus Extraction | econ.TH | We study surplus extraction in the general environment of McAfee and Reny
(1992), and provide two alternative proofs of their main theorem. The first is
an analogue of the classic argument of Cremer and McLean (1985, 1988), using
geometric features of the set of agents' beliefs to construct a menu of
contracts extracti... | economics |
4,777 | Characterizing Shadow Price via Lagrangian Multiplier for Nonsmooth Problem | econ.TH | In this paper, a relation between shadow price and the Lagrangian multiplier
for nonsmooth problem is explored. It is shown that the Lagrangian Multiplier
is the upper bound of shadow price for convex optimization and a class of
Lipschtzian optimizations. This work can be used in shadow pricing for
nonsmooth situation.... | economics |
4,778 | Conventions and Coalitions in Repeated Games | econ.TH | We develop a theory of repeated interaction for coalitional behavior. We
consider stage games where both individuals and coalitions may deviate.
However, coalition members cannot commit to long-run behavior, and anticipate
that today's actions influence tomorrow's behavior. We evaluate the degree to
which history-depen... | economics |
4,779 | The interplay between migrants and natives as a determinant of migrants' assimilation: A coevolutionary approach | econ.TH | We study the migrants' assimilation, which we conceptualize as forming human
capital productive on the labor market of a developed host country, and we link
the observed frequent lack of assimilation with the relative deprivation that
the migrants start to feel when they move in social space towards the natives.
In tur... | economics |
4,780 | Addictive Auctions: using lucky-draw and gambling addiction to increase participation during auctioning | econ.TH | Auction theories are believed to provide a better selling opportunity for the
resources to be allocated. Various organizations have taken measures to
increase trust among participants towards their auction system, but trust alone
cannot ensure a high level of participation. We propose a new type of auction
system which... | economics |
4,781 | On the Equilibrium Uniqueness in Cournot Competition with Demand Uncertainty | econ.TH | We revisit the linear Cournot model with uncertain demand that is studied in
Lagerl\"of (2006)* and provide sufficient conditions for equilibrium uniqueness
that complement the existing results. We show that if the distribution of the
demand intercept has the decreasing mean residual demand (DMRD) or the
increasing gen... | economics |
4,782 | General equilibrium in a heterogeneous-agent incomplete-market economy with many consumption goods and a risk-free bond | econ.TH | We study a pure-exchange incomplete-market economy with heterogeneous agents.
In each period, the agents choose how much to save (i.e., invest in a risk-free
bond), how much to consume, and which bundle of goods to consume while their
endowments are fluctuating. We focus on a competitive stationary equilibrium
(CSE) in... | economics |
4,783 | Informed Principal Problems in Bilateral Trading | econ.TH | We study bilateral trade with interdependent values as an informed-principal
problem. The mechanism-selection game has multiple equilibria that differ with
respect to principal's payoff and trading surplus. We characterize the
equilibrium that is worst for every type of principal, and characterize the
conditions under ... | economics |
4,784 | Dynamically Stable Matching | econ.TH | I introduce a stability notion, dynamic stability, for two-sided dynamic
matching markets where (i) matching opportunities arrive over time, (ii)
matching is one-to-one, and (iii) matching is irreversible. The definition
addresses two conceptual issues. First, since not all agents are available to
match at the same tim... | economics |
4,785 | Ordinal Imitative Dynamics | econ.TH | This paper introduces an evolutionary dynamics based on imitate the better
realization (IBR) rule. Under this rule, agents in a population game imitate
the strategy of a randomly chosen opponent whenever the opponent`s realized
payoff is higher than their own. Such behavior generates an ordinal mean
dynamics which is p... | economics |
4,786 | Existence and Uniqueness of Solutions to the Stochastic Bellman Equation with Unbounded Shock | econ.TH | In this paper we develop a general framework to analyze stochastic dynamic
problems with unbounded utility functions and correlated and unbounded shocks.
We obtain new results of the existence and uniqueness of solutions to the
Bellman equation through a general fixed point theorem that generalizes known
results for Ba... | economics |
4,787 | Contract Design with Costly Convex Self-Control | econ.TH | In this note, we consider the pricing problem of a profit-maximizing
monopolist who faces naive consumers with convex self-control preferences. | economics |
4,788 | Competing to Persuade a Rationally Inattentive Agent | econ.TH | Firms strategically disclose product information in order to attract
consumers, but recipients often find it costly to process all of it, especially
when products have complex features. We study a model of competitive
information disclosure by two senders, in which the receiver may garble each
sender's experiment, subj... | economics |
4,789 | The method of Eneström and Phragmén for parliamentary elections by means of approval voting | econ.TH | We study a method for proportional representation that was proposed at the
turn from the nineteenth to the twentieth century by Gustav Enestr\"om and
Edvard Phragm\'en. Like Phragm\'en's better-known iterative minimax method, it
is assumed that the voters express themselves by means of approval voting. In
contrast to t... | economics |
4,790 | Closed form solutions of Lucas Uzawa model with externalities via partial Hamiltonian approach. Some Clarifications | econ.TH | The main aim of this paper is to give some clarifications to the recent paper
published in Computational and Applied Mathematics by Naz and Chaudhry. | economics |
4,791 | A Production Function with Variable Elasticity of Factor Substitution | econ.TH | The main aim of this paper is to prove the existence of a new production
function with variable elasticity of factor substitution. This production
function is a more general form which includes the Cobb-Douglas production
function and the CES production function as particular cases. The econometric
estimates presented ... | economics |
4,792 | On the Solutions of the Lucas-Uzawa Model | econ.TH | In a recent paper, Naz and Chaudry provided two solutions for the model of
Lucas-Uzawa, via the Partial Hamiltonian Approach. The first one of these
solutions coincides exactly with that determined by Chilarescu. For the second
one, they claim that this is a new solution, fundamentally different than that
obtained by C... | economics |
4,793 | Dynamic Information Design with Diminishing Sensitivity Over News | econ.TH | A Bayesian agent experiences gain-loss utility each period over changes in
belief about future consumption ("news utility"), with diminishing sensitivity
over the magnitude of news. We show the agent's preference between an
information structure that delivers news gradually and another that resolves
all uncertainty at ... | economics |
4,794 | The interest rate for saving as a possibilistic risk | econ.TH | In the paper there is studied an optimal saving model in which the
interest-rate risk for saving is a fuzzy number. The total utility of
consumption is defined by using a concept of possibilistic expected utility. A
notion of possibilistic precautionary saving is introduced as a measure of the
variation of optimal savi... | economics |
4,795 | Third person enforcement in a prisoner's dilemma game | econ.TH | We theoretically study the effect of a third person enforcement on a one-shot
prisoner's dilemma game played by two persons, with whom the third person plays
repeated prisoner's dilemma games. We find that the possibility of the third
person's future punishment causes them to cooperate in the one-shot game. | economics |
4,796 | Equilibrium in Production Chains with Multiple Upstream Partners | econ.TH | In this paper, we extend and improve the production chain model introduced by
Kikuchi et al. (2018). Utilizing the theory of monotone concave operators, we
prove the existence, uniqueness, and global stability of equilibrium price,
hence improving their results on production networks with multiple upstream
partners. We... | economics |
4,797 | Improving Information from Manipulable Data | econ.TH | Data-based decisionmaking must account for the manipulation of data by agents
who are aware of how decisions are being made and want to affect their
allocations. We study a framework in which, due to such manipulation, data
becomes less informative when decisions depend more strongly on data. We
formalize why and how a... | economics |
4,798 | A Cardinal Comparison of Experts | econ.TH | In various situations, decision makers face experts that may provide
conflicting advice. This advice may be in the form of probabilistic forecasts
over critical future events. We consider a setting where the two forecasters
provide their advice repeatedly and ask whether the decision maker can learn to
compare and rank... | economics |
4,799 | Rational Inattention and Perceptual Distance | econ.TH | This paper uses an axiomatic foundation to create a new measure for the cost
of learning that allows for multiple perceptual distances in a single choice
environment so that some events can be harder to differentiate between than
others. The new measure maintains the tractability of Shannon's classic measure
but produc... | economics |
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